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    Marketing Analysis Toolkit: Pricing and Profitability Analysis

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    Shonali banerjee
    This document introduces key concepts for pricing and profitability analysis in marketing. It discusses how price influences customer demand, with demand curves representing the relationship between price and quantity demanded. The slope of the demand curve shows how quantity demanded changes with price. Price elasticity helps marketers understand how responsive customer demand is to price changes along the demand curve, whether demands is elastic or inelastic.

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    Marketing Analysis Toolkit: Pricing and Profitability Analysis

    Uploaded by

    Shonali banerjee
    30 views1 page
    This document introduces key concepts for pricing and profitability analysis in marketing. It discusses how price influences customer demand, with demand curves representing the relationship between price and quantity demanded. The slope of the demand curve shows how quantity demanded changes with price. Price elasticity helps marketers understand how responsive customer demand is to price changes along the demand curve, whether demands is elastic or inelastic.

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    This document introduces key concepts for pricing and profitability analysis in marketing. It discusses how price influences customer demand, with demand curves representing the relationship between price and quantity demanded. The slope of the demand curve shows how quantity demanded changes with price. Price elasticity helps marketers understand how responsive customer demand is to price changes along the demand curve, whether demands is elastic or inelastic.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views1 page

    Marketing Analysis Toolkit: Pricing and Profitability Analysis

    Uploaded by

    Shonali banerjee
    This document introduces key concepts for pricing and profitability analysis in marketing. It discusses how price influences customer demand, with demand curves representing the relationship between price and quantity demanded. The slope of the demand curve shows how quantity demanded changes with price. Price elasticity helps marketers understand how responsive customer demand is to price changes along the demand curve, whether demands is elastic or inelastic.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Marketing Analysis Toolkit: Pricing and Profitability Analysis

    Pricing is one of the most challenging issues marketers face, and it has the most direct and immediate
    influence on a company's bottom line. The core concepts and computations connected with pricing
    and profitability analysis are introduced in this marketing analysis toolbox.

    For most items, the price influences whether buyers will purchase it; as the price rises, the quantity
    wanted by customers decreases, and as the price decreases, the quantity demanded by customers
    increases. A demand curve, which is linear in its most basic form, visually represents the connection
    between price and demand.

    Customers' likely purchase volumes at various prices are plotted on a demand curve. The following
    formula is used to compute the slope of a linear demand curve:

    Slope of the demand curve (m) = change in price


    change in quantity
    demanded
    The price at which no client would buy a product because it is too expensive is indicated by the point
    where the demand curve crosses the y-axis. This is the maximum price a client is willing to pay for a
    product. The company will sell no units if they price the product at this level.

    The greatest number of units the company can sell if the price is zero, or the largest amount clients are
    ready to buy at any price, is where the demand curve crosses the x-axis. It's crucial to remember that a
    demand curve is only a simulation of what would happen in the market at various prices, therefore we
    should be more confident in its price projections.

    Marketers need to understand how responsive, or elastic, customers’ demand for a product is
    to a change in price at a certain point on the demand curve. The price elasticity of demand
    ratio helps illuminate this:
    Price Elasticity = Percentage change in quantity demanded
    of Demand Percentage change in price
    Inelastic demand curves have a steeper slope and are therefore more vertical than elastic
    demand curves, indicating that the quantity demanded by consumers does not change
    very much when the price is increased or decreased.
    The following chart summarizes the range of elasticities that exist in the marketplace to
    guide interpretation:

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